HM King Nicholas I stands in his gleaming white uniform in front of an elderly Elddis Mistral GTX caravan, which he calls CopemanPalace. This is what happens when a youthful jape gets out of hand.

Two years ago, 25-year-old Nicholas Copeman and his friend John Painter were bored, so they changed their names by deed poll to Henry Michael King Nicholas and The Right Reverend Baby Face Archbishop of Fantaberry. Warming to the idea, King Nicholas declared himself monarch of the independent Copeman Empire, whose focus was to be Baby Face's old caravan, now renamed CopemanPalace. Then he began selling peerages, shifting, he says, "a surprisingly big number".

On one occasion, he pocketed £1,000 from someone called Hills in exchange for creating him The Lord Hills. "He was a bit of berk, really," says His Majesty. "I think he just wanted to impress everyone at the golf club." Eventually, he had to stop because an American who wanted to become an earl began reporting him to people. Knighthoods, however, are still on sale for £20. "Although that's negotiable."

This morning, King Nicholas and his palace will take up residence on the Royal Mile and make themselves available to the public, at £2 each. "It's not a show as such," explains His Majesty. "I might be in here doing the crossword, or a sudoku. John Miles may be on the stereo. And people can ask me questions about what it's like being a royal, and so on."

Everthing inside CopemanPalace is carefully labelled. "I don't want people getting lost," His Majesty explains as he begins the tour. "This is the throne room." He waves imperiously at a chemical loo and a bucket. "You have to pay £1 to use the toilet, including paper, but if you're a bit skint I might let you use the bucket." In the main hall is a gallery of pictures of Zara Phillips, King Nicholas's unrequited love. "I write her the occasional letter," he says.

This is the palace's first public outing, and the king is optimistic, hoping that tea and cucumber sandwiches will pull in a crowd. He remains a touch concerned about his sword, however, which is only ceremonial, but real enough. "People might think I'm a nutcase."